On occasion, program participants will submit questions regarding definitional clarification. Many of the more frequent of these are listed below. If you have a question you would like to submit to the other participants, please send them to gibson@api.org

FAQ List

1. What is a nominal pipe diameter?

2. Is pipeline depreciation included in the survey?


3. We allocates the total rent expense to various departments. Some of the rent is applied to operations and the other is left in Admin. For the survey, do we need to take out the rent expense from the departments and isolate it in other corporate and admin expenses?


4. The category of "Spill Response Cleanup and Remediation Expense" asks for response, cleanup and remediation expense but what about the cost of buying and maintaining a plethora of oil spill equipment? Should that be included here?


5. The variables "Safety and Environmental Expense" and "Safety and Environmental staff" both reference training and qualification but specifically targeted at safety and environmental training and qualifications. Where do we capture all the other costs of training and qualifications related to technical and other skills?


6. Should pigging and pipe inspection staff be included in engineering staff?


7. Does "Right of Way Expense" include right-of-way renewal. If not, where should this expense be included?

8. In which O&M category would oil gain/loss expense/credit and/or claims& Lawsuits be reported?

9. Does Indirect and Direct Expense include benefits and payroll taxes?

10. Does the Survey include all expenses on the income statement except for depreciation? Do we need to categorize everything into a group and/or label and report? For example, should casualty loss and interest expense be included? What about oil loss expense?

11. Does the Survey include only carrier expenses or should I also include the non-carrier expenses?

12. How are pipeline relocation expenses handled? While these do not exactly fit the definition of O&M expense or outside service - "routine operations, maintenance or repair" - they are considered normal business practice when they occur.

13. The guidelines state that staff counts and costs should include only INTERNAL staff except where specifically stated. How should contractor costs and FTEs be accounted for?

14. Does the survey include oil Gain/Loss expense/credit and/or Claims & Lawsuits in the survey? If so, which O&M category would they be reported?

Other questions related to definitions may be found in the Benchmarking Description and Definition document [Word Document, Adobe Acrobat], as put together by the API and the survey participants.

FAQ Answers

1. Nominal pipe diameter. Pipe is generally referred to by the outside diameter or the nominal pipe size. For technical purposes most engineers would use the outside diameter and also include the wall thickness and grade. For non-technical purposes nominal is more common. "[Pipe] Diameters of 12 inches and less have a nominal size which represents approximately that of the inside diameter of standard-weight pipe." Marks' Standard Handbook for Mechanical Engineers. In ordinary conversation, press release, non-technical communication people generally are using the nominal pipe size. For example, 6" pipe (nominal size) is referred to instead of 6.625" pipe (outside diameter), 12" pipe (nominal size) is referred to instead of 12.75" pipe (outside diameter). For sizes greater than 12" the outside diameter and the nominal pipe size are the same.
   
   
   
2. Pipeline depreciation. Since Depreciation charges are very sensitive to the age of the pipeline, depreciation was intentionally excluded from the study.
   
   
   
3. Rent expense. Definitions per PART 352 - UNIFORM SYSTEMS OF ACCOUNTS PRESCRIBED FOR OIL PIPELINE COMPANIES SUBJECT TO THE PROVISIONS OF THE INTERSTATE COMMERCE ACT: 350 Rentals - This account shall include the cost of renting property used in the operations and maintenance of carrier transportation service, such as complete pipeline or segment thereof, office space, land and buildings, and other equipment and facilities. For 1998 & 1999 data, elements mapped to this account were put into "Other Operations & Maintenance Expense." For 2000 data, we need to net out and report applicable Right-of-way Expense elements covered by the new survey definition.
   
   
   
4. Spill Response Cleanup and Remediation Expense. These are costs related to specific leaks/spills. If the oil spill equipment was purchased for a specific leak and if it is NOT capital in nature, include it here. If it's capital in nature, do NOT include it. If it's NOT for a specific leak and it's operating in nature, I'd include it in Safety and Environmental Expense.
   
   
5. Other costs of training and qualifications related to technical and other skills. They'd go in the appropriate category in G&A or O&M as applicable.
   
   
   
6. Pigging and pipe inspection staff. The actual costs of pigging and inspection would be charged to Operations & Maintenance. The Engineering Staff supporting these functions would be charged to General & Administrative.
   
   
7. Does "Right of Way Expense" include right-of-way renewal. If not, where should this expense be included? For most companies, Right-of-Way renewals are a fairly uniform amount from year to year and would be reported under Right-of-Way in Operations & Maintenance. If a company pays a "large" renewal fee that covers many years, the fee should be prorated over the period covered by the renewal. Otherwise, it could grossly distort the survey results.
   
   
8. In which O&M category would oil gain/loss expense/credit and/or claimers& Lawsuits be reported? Gain/Loss was included as a named O&M expense element in the 1998 and 1999 surveys, but was dropped in 2000 (and 2002). Claims/lawsuits was not included but may be a component of oil spill remediation costs.
   
9. Benefits and taxes are included with every salary dollar reported. They should be associated with each expense category.
   
10. The Survey does not include depreciation, casualty loss, interest expense, income tax, or oil gain/loss.
    
11. The Survey includes carrier expense directly related to pipeline Operation & Maintenance or General (similar to page 303 of FERC Form 6 with exceptions noted in FAQ Question 10.)
    
12. If relocation means "employee relocation", it is reported as a "labor" component (items 16, 17, 18, or 19 of the 2003 Survey). If relocation means "pipeline relocation", it's reported as "Core Maintenance Capital Expenditures" (item 8 of the 2003 Survey).
    
13. For G&A, we include the contractor costs but NOT the associated FTE count. The G&A input form is set up so we can match direct expense with internal staff. Outsourcing costs are reported in a separate column.
    
14. Gain/Loss was included as a named O&M expense element in the 1998 and 1999 surveys but was dropped in 2000 (and 2002). costs for claims and lawsuits was not included, but may have been placed into oil spill remediation costs.